Set forth below is the text of a comment that I recently posted to the discussion thread for another blog entry at this site:
Over at Bogleheads.org they are celebrating the 10 year anniversary of the site’s founding. As you know, your behavior at morningstar.com played a major part in the creation of the board.
Feb. 19, 2017 is a very special day. It marks the 10th birthday of this Bogleheads.org forum.
Born out of frustration over the lack of moderation at our previous home, this moderated Bogleheads.org forum has been a remarkable success. Over the past 10 years, we’ve had over 3,000,000 posts on more than 200,000 topics. We now have nearly 57,000 members and about 10 times that number of guests (affectionately known as “lurkers”). Our viewer numbers are off the charts. We get more than 70,000 unique visitors per day from all around the world. The forum averages around 4,000,000 hits per day.
https://www.bogleheads.org/forum/viewtopic.php?f=9&t=211525&newpost=3246896
I’m grateful to you for providing us the link, Observer.
I am sure you understand that I do not agree with the thrust of the words quoted. I would say that there is great POTENTIAL value because of the 57,000 members and 570,000 (estimated) lurkers. Those people COULD be adding to the world’s knowledge of how investing works in a big way and it is certainly their intent and their desire to do so. But so long as fully honest posting on the implications of the last 36 years of peer-reviewed research is prohibited at the board, that potential cannot be realized.
In fact, the reality is just the opposite of the promised potential. So long as honest posting re the last 36 years of peer-reviewed research is prohibited, the board has a NEGATIVE influence. It does not help people learn how to invest effectively. It encourages them in the pursuit of their Get Rich Quick fantasies. The bigger the Bogleheads Forum is, the more harm it does, the more lives it destroys. And that will remain so for so long as fully honest posting re safe withdrawal rates and scores of other critically important investment-related topics remains prohibited.
This is as clear as anything could be clear to me, Observer. If the people running the Bogleheads Forum were thinking clearly, they would agree with me. If you asked them when they started the Vanguard Diehards board whether they believed that honest posting re the peer-reviewed research should be permitted, they would have said with zero hesitation that of course it should be permitted, that the question is an absurd one. They justified in their minds an exception to that belief when they were faced with my claim that it is not possible to calculate the safe withdrawal rate accurately without considering the valuation level that applies on the day the retirement begins and all of the ugliness that followed took place because they could not bear to live up to their own ideals. It was just too hard for them even to admit the possibility that their hero Jack Bogle had made a mistake when he failed to acknowledge the “revolutionary” (Shiller’s words) implications of Shiller’s finding that valuations affect long-term returns back when those findings became public back in 1981.
I believe that I possess a right and a responsibility to post honestly that must be respected at the Bogleheads Forum and at every other investing discussion board and blog on the internet. I believe that every one of my fellow community members, both my Valuation-Informed Indexing friends and my Buy-and-Hold friends, possess that same right and responsibility. I believe that it is a criminal act for me to fail to exercise that responsibility and for the site owners of the Bogleheads Forum to fail to respect that right.
I don’t believe that this one is a close call. I don’t believe that every act of financial fraud that has been revealed over the 15 years will be prosecuted because that would not be practical and because there is a mitigating factor of cognitive dissonance that applies (Bogle and the others who advocate Buy-and-Hold personally believe that it works). But still, in an objective sense it is a felony to insist that posters lie about the numbers that their friends are using to plan their retirements. I love my country and the relentless promotion of this dangerous and irresponsible lie has caused an economic crisis that has caused millions to begin to question their confidence in our system of government. So I don’t want to go there. Not in 15 years, not in 15 billion years. Re that one, my Boglehead friends are going to have to find someone else to participate at their board discussions (it appears from the words quoted above that they have been successful at finding quite a few someone elses).
I love my Boglehead friends, Observer. I wish them all good things. I agree with them on all issues other than the valuations issue and I believe that it is at least their intent to do good. But I cannot in good conscience participate in their discussions for so long as the Ban on Honest Posting re safe withdrawal rates and scores of other critically important investment-related topics remains in place. I believe with my heart , mind and soul that valuations affect long-term returns and that that reality (which has been known to those who follow the peer-reviewed research in this field for 36 years now) affects every issue considered at that board.
I cannot in good conscience put my name up in support of an enterprise that is in the process of destroying millions of middle-class lives and in an ultimate sense threatening the continued viability of the country that I love. I don’t believe that even a single one of my Bogleheads friends would participate in discussions held at that board if he or she were able to see clearly the things that I am able to see clearly because I have worked so hard for 15 years now to overcome the veil of cognitive dissonance that limits their vision today.
I love you guys, Observer. I wish you well. But we can not work together under the conditions that you insist on. I am not able to imagine any circumstance in which that could change.
I personally believe that conditions WILL change in a dramatic way following the next price crash. I believe that at that time we will come to be good friends. But I understand that there is nothing that I can say today that will persuade you that what I foresee happening will ever take place in the real world. So my only realistic option is to continue to do my best to get the word out re the implications of the last 36 years of peer-reviewed research at all places other than the Bogleheads Forum and to hope and pray that doing that successfully will in time generate pressure among responsible people in that board community to demand changes in the operation of that board My personal assessment at this stage of the proceedings is that my efforts will not bear good fruit until the days following the next price crash. But I will continue to give it my best shot. I can obviously do no more and I can obviously do no less.
I hope that all that helps a tiny bit, my long-time Goon friend. My best and warmest wishes to you and yours.
Rob
So these 10’s of thousands at the Bogleheads board are all just stupid, yet Rob Bennett has the unique insight to have figured it out, leading to his wealth that is beyond the imagination of most.
Buy-and-Holders are not stupid, Anonymous. I’ve never met a stupid Buy-and-Holder. And I’ve met lots of Buy-and-Holders.
Were all the doctors who for many years thought that bleeding patients was a good medical practice stupid, in your assessment?
Were all the scientists who did not manage to land a man on the moon prior to 1969 stupid, in your assessment?
Were all the general managers of baseball teams who until recent decades did not follow the principles of sabermetrics in evaluating pitchers and hitters stupid, in your assessment?
Stupidity has absolutely nothing to do with it.
Humankind was not placed on Planet Earth knowing everything there is to know about every subject. We have acquired knowledge over time. In most fields of human endeavor, we incorporate new knowledge into our understanding of the subject matter, thereby making progress over time. That’s not how it has worked in the stock investing field over the past 36 years.
In 1981, Yale Economics Professor Robert Shiller discovered something of huge importance, something of “revolutionary” (his word) import. Shiller discovered that valuations affect long-term returns. That turned everything that we once knew about how stock investing works on its head. If valuations affect long-term returns, the market is not efficient, as the Buy-and-Holders believed. If valuations affect long-term returns, risk is not stable, as the Buy-and-Holders believed. If valuations affect long-term returns, one form of market timing (long-term market timing) must always work and must always be 100 percent required. That’s the OPPOSITE of what the Buy-and-Holders believed. The Buy-and-Holders believed that market timing does NOT work and is NOT required. Shiller changed all that.
Intellectually.
Intellectual advances are not always given immediate acceptance. Shiller’s revolutionary advances, advances for which he has been awarded a Nobel prize, were not immediately accepted by the Buy-and-Holders. The problem is not that they are stupid. The problem is that they are humans and thus suffer from time to time from the phenomenon known as “cognitive dissonance.” Shiller’s advances are a pure good, the biggest pure good we have ever seen in the history of personal finance. But they shocked the Buy-and-Holders, who truly believed that they had figured out how stock investing works in the good work they had done prior to 1981.
We need to help the Buy-and-Holders overcome their cognitive dissonance. Otherwise, our economic system will not survive. And, if our economic system does not survive, in all likelihood our political system will not survive either. The stakes could not be higher.
Cognitive dissonance cannot be overcome through the presentation of research. The research couldn’t possible be more clear. 100 percent of the research supports Valuation-Informed Indexing, 0 percent supports Buy-and-Hold. The resistance that the Buy-and-Holders have to Valuation-Informed Indexing is not intellectual in nature, it is emotional in nature. It can only be overcome through extensive discussion and it can only be overcome gradually over the course of a long period of time.
I announced plans to attend the 2006 Bogleheads Conference and to ask Jack Bogle questions about safe withdrawal rates and other valuation-related matters. That would have been a great opportunity for me to help both Bogle and the thousands of Bogleheads who follow Bogle’s teachings overcome their cognitive dissonance. There is nothing that I could say that would convert every Buy-and-Holder in a single day. But there are things that I could say that would convert a tiny percentage of Buy-and-Holders in a single day. And that would cause a larger percentage to entertain a few doubts, doubts that would grow over time and culminate in their own conversions somewhere down the line.
That’s how it is done. All new ideas are believed first by one person, then by two people, then by 20 people, then by 200 people, then by 2,000 people and so on. There has never been an idea that was accepted 100 percent by 200 million people on the first day. People need to hear about an idea and then think about it and then ask questions and then ponder the answers given and then develop new questions and then hear the answers to those questions. That’s how it is done in every field other than the investing advice field and that is the only way that new ideas can ever grow and become dominant. That’s how it must be done in the investing advice field as well.
There are a good number of economists today who very much want to share with us all what they sincerely believe about how stock investing works in the real world. There are investment advisors who want to do the same. There are journalists who want to do the same. There are academic researchers who want to do the same. There are policymakers who want to do the same. There are bloggers who want to do the same.
All these people are seeking to HELP us. They are not willing to see their loved ones threatened with physical violence as their reward for helping out. They are not willing to see their careers threatened as their reward for helping out. The laws against financial fraud were adopted for good reasons. All of the people willing to help us out will be doing so once we make clear that we will protect them from the tactics that have been employed for 15 years running now by the members of Bogle’s various internet goon squads by enforcing the laws against financial fraud in a reasonable manner. Once we signal as a society that we will permit honest discussion, we will see a flood of it and all of our lives will begin getting better and better and better and better and better.
If we do it today, the prison sentences assigned to those who have posted in “defense” of Mel Lindauer and John Greaney and Jack Bogle will be shorter than they will be if we wait until after the next price crash to do it. For obvious reasons. I think of you Goons as friends. So I obviously prefer that we bring all the ugliness to a full and complete stop by the close of business today.
But it’s not my call. The way things are set up today, you Goons get a vote on how long your prison sentences will be (and on how much more damage will be done to the people of the United States). Given that you are Goons, I don’t have much confidence that you will make a positive and constructive and life-affirming call. It would be very un-Goon-like of you to do so. I have seen too much at this point to expect to see you making any seriously un-Goon-like calls.
So we will wait until we see the next price crash. The human misery we will see with a deepening of the economic crisis will take the call out of your hands. Bogle is going to switch to working with the good guys at that point. So you Goons will be cooked.
I hope that works for you, Anonymous.
I naturally wish you all the best that this life has to offer a person.
Rob
“I announced plans to attend the 2006 Bogleheads Conference and to ask Jack Bogle questions about safe withdrawal rates and other valuation-related matters.”
Now THAT was stupid. It led to: “Born out of frustration over the lack of moderation at our previous home, this moderated Bogleheads.org forum has been a remarkable success.”
We have to give credit where it’s due. Who else could single-handedly cause so much irritation that thousands preferred moving to a new board, created just to avoid that irritation?
I say no one. You are special, Rob. Just not in any good way.
I don’t think that anything like that has ever happened on the internet before, Anonymous. There is indeed something “special” about me.
But the only thing that I do different than Saint Jack Bogle is that I cite the last 36 years of peer-reviewed research as well as the pre-1981 research in my work. Why does that irritate people so much?
It does irritate many people in a very big way. You are right re that much. But you don’t care to explore why.
It irritates people because their financial futures are riding on the accuracy of the Buy-and-Hold Model and I point out that the last 36 years of peer-reviewed research shows that Buy-and-Hold is far from accurate in every claim it makes. It is the fear of seeing their futures destroyed that really irritate people, I am just the messenger that brings the news to them.
I think people need to hear this news. I think that our best chance of dealing with the problems that we have made for ourselves is to face up to them. I think there is a lot of good news in the last 36 years of peer-reviewed research that will help to counter a lot of the scary stuff that as a society we are trying to ignore.
Words can’t hurt you, Anonymous. The power of my material comes from the fact that it is rooted in the last 36 years of peer-reviewed research. If you thought that that research was not legitimate, nothing that I said would irritate you. I irritate you because there is a voice of common sense within you that wonders if Buy-and-Hold truly adds up, that wonders whether Shiller and all the others might be on to something. Your irritation is evidence that you very much need to hear the message and consider it carefully. The fact that I irritate so many tells me that there are very many who very much need to hear and carefully consider this message.
These are my sincere thoughts re these terribly important matters, in any event.
I naturally wish you the best of luck in all your future life endeavors.
Rob